Groton — The Navy notified Congress on Tuesday that it plans to stop repairing the USS Miami and, instead, to scrap it.

In April, the Navy discovered additional cracking on board the Miami, which was severely damaged after a civilian worker set a fire inside the submarine while it was undergoing repairs at the Portsmouth Naval Shipyard in Kittery, Maine, in May 2012. The discovery of the additional damage raised repair costs from an estimated $450 million to $700 million, according to the Navy.

Electric Boat was awarded a $94 million contract in September to plan for the repairs, and the repair contract was also expected to go to the shipyard. At its peak, about 300 EB employees were expected to be working on the project.

But given the fiscally constrained environment, and the automatic spending cuts known as sequestration that were triggered in March, a spokeswoman said, Navy officials knew additional funding would not be available.

The Navy would need $390 million in fiscal 2014 to pay for the repairs to the Groton-based submarine, including the increased costs and scope of the work, as well as to replenish a contingency account should the cost increase again. The Navy has spent $8 million on the Miami repair so far this year.

"There has always been a degree of uncertainty with the repair effort. It was the biggest casualty of its type by far and we embarked on the repair effort without a complete understanding of how big a challenge that was," Rear Adm. Kenneth M. Perry, commander of Submarine Group Two, said in an interview Tuesday. "We had to move out and start repairing."

That uncertainty, now coupled with intense fiscal pressures, Perry said, led the Navy to evaluate critically whether to provide the resources to return Miami to the fleet. Perry did not discuss the decision specifically because, he said, it was made by top Navy leaders.

U.S. Sen. Richard Blumenthal and U.S. Rep. Joe Courtney each received calls Tuesday from Navy officials conveying the service's intention to inactivate the ship.

"It is sickening when you think about the fact that the U.S. Navy has lost a submarine to an act of arson," Courtney, D-2nd District, said. "It didn't happen in a conflict. It didn't happen from an enemy. It happened from an American citizen, and the consequences are going to be felt for a long time. The number of mission requests for submarines is far higher than the capacity of the fleet and this aggravates that delta, or shortfall."

Casey James Fury, a civilian painter and sand blaster, was sentenced to more than 17 years in federal prison in March after he pleaded guilty to setting fire to rags aboard the Miami (SSN 755) when it was at the Portsmouth Naval Shipyard for a 20-month overhaul. He told authorities he suffered from anxiety and wanted to leave work. Seven people were injured fighting the blaze, which burned for 12 hours.

Blumenthal, D-Conn., said the loss of the Miami underscores the "vital need" to continue building two Virginia-class submarines per year.

"We need to sustain our advantage in undersea warfare so there can be no question now that two submarines a year have to be built at Electric Boat," he said. "… Eventually we can compensate for the temporary loss of a submarine by continuing our building program."

Blumenthal said he wants to review the facts that led to the decision, but "certainly the Navy has to consider budget restraints and unanticipated costs."

Robert Hamilton, spokesman for EB, said the shipyard has not yet analyzed the impact of the lost work. But Courtney said the project did represent a significant amount of work for the shipyard and it will be a challenge to find other repair jobs.

"I spoke to some of the folks at EB over the weekend about this issue and people were bracing themselves for it," Courtney said.

The Navy had said it would fix the submarine by April 30, 2015, because the Miami still has 10 years remaining in its roughly 30-year service life, making it eligible for at least five more deployments.

Inspections later revealed that due to environmentally assisted cracking in the steel piping and fasteners used in the air, hydraulic and cooling water systems, a significant number of components in the torpedo room and auxiliary machinery room would need to be replaced, according to the Navy.

"The decision to inactivate Miami is a difficult one, taken after hard analysis and not made lightly," Rear Adm. Rick Breckenridge, the director of undersea warfare, said in a statement. "We will lose the five deployments that Miami would have provided over the remaining 10 years of her planned service life, but in exchange for avoiding the cost of repairs, we will open up funds to support other vital maintenance efforts, improving the wholeness and readiness of the fleet."

Breckenridge said funding the repairs would have meant the cancellation of work on dozens of surface ships and submarines, and the Navy and the nation "simply cannot afford to weaken other fleet readiness in the way that would be required to afford repairs to Miami."